JB Collision et al v. Sherwin-Williams

Transcription

1 Paul F. Sorrentino (SBN 126348)
John P. Nordlund (SBN 286153)
2 JACKSON LEWIS P.C.
225 Broadway, Suite 200
3 San Diego, CA 92101
Tel: 619.573.4900
4 Fax: 619.573.4901
SorrentinoP@jacksonlewis.com
5 John.Nordlund@jacksonlewis.com
6 Attorneys for Defendant/Counter-Claimant
JB COLLISION SERVICES, INC. dba
7 J&M AUTOBODY dba EL DORADO COLLISION
8
UNITED STATES DISTRICT COURT
9
SOUTHERN DISTRICT OF CALIFORNIA
10
)
11 THE SHERWIN-WILLIAMS
COMPANY, f/k/a SHERWIN-WILLIAMS )
)
12 AUTOMOTIVE FINISHES CORP.,
)
)
13
Plaintiff,
)
)
14
vs.
)
)
15 JB COLLISION SERVICES, INC., dba
)
J&M AUTOBODY, and d/b/a EL
)
16 DORADO COLLISION; and DOES 1
)
through 10, inclusive,
)
17
)
Defendant.
)
18
)
)
JB
COLLISION
SERVICES,
INC.,
dba
19
)
J&M AUTOBODY, and d/b/a EL
)
DORADO
COLLISION,
20
)
)
Counter-Claimant,
21
)
)
vs.
22
)
)
THE
SHERWIN-WILLIAMS
23
COMPANY, f/k/a SHERWIN-WILLIAMS )
)
24 AUTOMOTIVE FINISHES CORP,
)
)
Counter-Defendant.
25
)
)
26
)
)
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Case No.: 13-CV-1946 LAB (WVG)
Consolidated with
13-CV-1947 LAB (WVG)
COUNTER-CLAIMANTS’
CONSOLIDATED SECOND
AMENDED COUNTERCLAIM FOR
DAMAGES and DEMAND FOR JURY
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CONSOLIDATED SECOND AMENDED COUNTERCLAIM FOR DAMAGES
CASE NO. 13-CV-1946 LAB (WVG)
1
COUNTERCLAIM
2
Pursuant to the Court’s June 10, 2014, Counter-Claimants JB COLLISION
3
SERVICES, INC. dba J&M AUTOBODY dba EL DORADO COLLISION (“JB
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Collision”), JJT, INC. dba JOHN’S COLLISION CENTER (“JJT”), and JOHN TYCZKI
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(“John Tyczki”) (collectively referred to as “Counter-Claimants”) hereby submit the
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present [Consolidated] Second Amended Counterclaim against Counter-Defendant THE
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SHERWIN-WILLIAMS COMPANY, f/k/a SHERWIN-WILLIAMS AUTOMOTIVE
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FINISHES CORP. (“Sherwin-Williams”) pursuant to Federal Rule of Civil Procedure 13,
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as follows:
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I.
11
PARTIES
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1.
JB Collision is a California corporation with its principal places of business
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in San Diego and Poway, California. JB Collision is engaged in the business of repairing
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and painting automobiles. JB Collision does business solely in California.
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2.
JJT is a California corporation with its principal place of business in Santee,
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California. JJT is engaged in the business of repairing and painting automobiles. JJT does
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business solely in California. JJT was formed, and opened the John’s Collision Center in
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Santee, California, in or about March 2011.
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3.
John Tyczki is the owner and President of both JJT and JB Collision, and is,
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and was at all times mentioned, domiciled in and a citizen of the State of California. At
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all times mentioned herein, John Tyczki was involved in and acted on behalf of JJT and
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JB Collision during all interactions with Sherwin-Williams. John Tyczki is the sole
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shareholder and the President of both JJT and JB Collision. John Tyczki oversees all
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operations and dealings of JJT and JB Collision. John Tyczki negotiated and entered into
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both contracts at issue in this Matter with Sherwin-Williams on behalf of JJT and JB
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Collision. Also, John Tyczki oversaw the performance of both contracts, and throughout
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the contract terms, personally communicated with the same Sherwin-Williams employees
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regarding the performance of both contracts. John Tyczki had sole control in JJT’s and
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JB Collision’s course of dealings with Sherwin-Williams.
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4.
Sherwin-Williams is an Ohio corporation with its principal place of business
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in Ohio. Sherwin-Williams has offices and employees in California, and does business in
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California. Sherwin-Williams is engaged in the business of selling automotive paints,
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coatings, and related products.
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II.
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JURISDICTION AND VENUE
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5.
This Court has diversity jurisdiction and supplemental jurisdiction of these
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Counterclaims pursuant to 28 U.S.C. §§ 1332(a)(1), 1367(a). The amount of controversy
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in this case exceeds a sum of $75,000.00. Further, the Parties are completely diverse;
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Sherwin-Williams is an Ohio corporation with a principal place of business in Ohio, and
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JB Collision and JJT are California corporations with principal places of business in
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California. These Counterclaims arise out of the same transactions and/or occurrences
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that are the subject of Sherwin-Williams’s Complaints against JB Collision, JJT, and
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John Tyczki, and do not destroy the aforementioned diversity jurisdiction of this Court.
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6.
Venue of this action is proper in this Court pursuant to 28 U.S.C. § 1391(a),
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as set forth in Sherwin-Williams’s Complaints.
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III.
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FACTUAL ALLEGATIONS
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A.
JB Collision Agreement Terms
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7.
On or about September 10, 2008, JB Collision and Sherwin-Williams
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entered into a supply agreement (“JB Collision Agreement”) under which JB Collision
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agreed to exclusively purchase automotive paint and related products from Sherwin-
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Williams until the net amount of JB Collision’s purchases of products from Sherwin-
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Williams equaled One-Million, Three-Hundred Thousand Dollars ($1,300,000.00) (“JB
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Collision Term”).
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8.
As part of the Agreement, Sherwin-Williams agreed to provide JB Collision
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with an advance payment in the amount of Two-Hundred Seventy-Five Thousand Dollars
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($275,000.00) (“JB Collision Advance”). A true and correct copy of said Agreement is
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attached hereto as Exhibit “1” and incorporated herein by reference. Additionally,
5
Sherwin-Williams agreed to provide JB Collision with a discount of products purchased
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from Sherwin-Williams. However, the discount on individual purchases made under the
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JB Collision Agreement was less than the discount JB Collision would have obtained on
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individual purchase absent the JB Collision Agreement because said “discounts” were
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paid upfront to JB Collision as part of the aforementioned JB Collision Advance.
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9.
Under the JB Collision Agreement’s terms, if JB Collision terminated the JB
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Collision Agreement before the completion of the JB Collision Term, Sherwin-Williams
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was entitled to a “Refund” limited to the value of the product of the value of the Advance
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times the quotient of the value of the JB Collision Term minus the Value of Net Sales
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from the effective date of the Agreement divided by the value of the Term (Refund =
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$275,000.00 X (($1,300,000.00 – Net Sales) / 1,300,000.00))).
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10.
The JB Collision Agreement applied to “all automotive collision repair and
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refinish facilities owned and/or operated by [JB Collision]…including, without
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limitation, the facilities located at the following addresses: [¶] (i) J & M Autobody, 9126
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Dowdy Drive, San Diego, CA 92126; and [¶] (ii) El Dorado Collision, 12502 Poway
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Road, Poway, CA 92604.”
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B.
JJT Agreement Terms and Guaranty
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11.
Following the formation of JJT and the opening of John’s Collision Center
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in or about March 2011, on or about May 29, 2011, JJT and Sherwin-Williams entered
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into a (second) supply agreement (“JJT Agreement”) under which JJT agreed to
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exclusively purchase automotive paint and related products from Sherwin-Williams until
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the net amount of JJT’s purchases of products from Sherwin-Williams equaled Two-
27
Hundred, Fifty Thousand Dollars ($250,000.00) (“JJT Term”). A true and correct copy
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of said Agreement is attached hereto as Exhibit “2,” and is incorporated herein by
2
reference.
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12.
As part of the JJT Agreement, Sherwin-Williams agreed to provide JJT with
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an advance payment in the amount of Forty Thousand Dollars ($40,000.00) (“JJT
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Advance”). Additionally, Sherwin-Williams agreed to provide JJT with a discount of
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products purchased from Sherwin-Williams. However, the discount on individual
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purchases made under the JJT Agreement was less than the discount JJT would have
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obtained on individual purchase absent the JJT Agreement because the “discounts” were
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paid upfront to JJT as part of the aforementioned JJT Advance.
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13.
Under the Agreement’s terms, if JJT terminated the JJT Agreement before
11
the completion of the JJT Term, Sherwin-Williams was entitled to liquidated damages in
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the amount of the JJT Advance.
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14.
On or about May 10, 2011, John Tyczki entered into a written guaranty of
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the JJT Agreement (“Guaranty”), which pre-dated the JJT Agreement and is therefore not
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enforceable. A true and correct copy of the Guaranty of the JJT Agreement is attached
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hereto as Exhibit “3,” and is incorporated herein by reference.
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C.
Overview of Continued Business Interactions Between the Parties
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15.
Because John Tyczki is the sole shareholder and the President of both JJT
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and JB Collision, and he managed and acted on behalf of both JJT and JB Collision
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during all interactions with Sherwin-Williams, he, on behalf of both entities, has had a
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continued business relationship with Sherwin Williams since approximately June 2008.
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Accordingly, John Tyczki has made business decisions on behalf of both entities based
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upon the totality of all representations and interactions with Sherwin-Williams from the
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beginning of the business relationship. Consequently, in John Tyczki’s, and therefore also
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JB Collision’s and JJT’s, reliance on Sherwin-Williams’s representation, no particular
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statement by Sherwin-Williams throughout the business relationship was considered in a
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vacuum.
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16.
In the mid to late 2000’s, the California Air Resources Board and different
2
municipalities in California began adopting environmental regulations requiring
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automotive paint shops to use water-based (as opposed to solvent-based (also known as
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oil-based)) paint products. Prior to JB Collision entered into the JB Collision Agreement,
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Los Angeles adopted an ordinance requiring the use of water-based automotive paint
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products. It was anticipated that San Diego’s ordinance would go into effect soon after. In
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anticipation of the new water-based paint requirement in San Diego, and because water-
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based paint systems were a relatively untested and undeveloped technology, John Tyczki
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wanted to “get ahead of the curve” and install a fully developed, properly-functioning
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water-based paint system in JB Collision’s shops before the regulations required water-
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based paint in San Diego. John Tyczki wanted to ensure that his employees were fully
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trained in spraying water-based paint, that his shops were fully prepared, and the paint
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system was properly working before spraying water-based paint was mandated, so that
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the water-based paint restrictions did not affect
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automotive paint services when the regulations were enacted.
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17.
the high quality of JB Collision’s
In or about June 2008, John Tyczki, on behalf of JB Collision, began
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speaking with Sherwin-Williams regarding a potential agreement regarding the
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installation of a water-based paint system in JB Collision’s shops after he was
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approached by Jose Garcia (Sherwin-Williams). Three factors John Tyczki considered in
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entering into the JB Collision Agreement on behalf of JB Collision were Sherwin-
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Williams’s willingness to provide the JB Collision Advance, Sherwin-Williams’s Sales
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Representative’s, Jose Garcia, specific representations regarding what was covered by the
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JB Collision Term (Term of the JB Collision Agreement), and Jose Garcia’s express
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representations regarding the performance and quality of Sherwin-Williams water-based
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automotive paint products. John Tyczki told Jose Garcia that he would not enter into the
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JB Collision Agreement on behalf of JB Collision if all purchased products did not count
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toward the running of the JB Collision Term. Mr. Garcia specifically represented to John
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Tyczki that all products JB Collision purchased under the JB Collision Agreement, not
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1
just paint, would count toward the running of the JB Collision Term, and he stated to
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John Tyczki that the calculation of the JB Collision Term was “everything you buy from
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us is included to count toward the $1.3 million” (referring to Sherwin-Williams), or
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words to that effect. John Tyczki understood the JB Collision Agreement to so provide
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and intended that it do so, and he would not have entered into the JB Collision
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Agreement if it did not include the purchase of all products toward the $1.3 million
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contract amount, and Mr. Garcia specifically was aware of this. Sherwin-Williams is now
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claiming that not all product purchases counted towards the $1.3 million JB Collision
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Term, and that JB Collision is in breach of the Agreement. Should the JB Collision
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Agreement somehow be interpreted in this manner, then Mr. Garcia specifically and
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fraudulently misrepresented the terms of the JB Collision Agreement to induce John
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Tyczki to enter into said Agreement.
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18.
Additionally, during discussions between JB Collision and Sherwin-
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Williams in or about August and September 2008 regarding entering the JB Collision
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Agreement, Sherwin-Williams also made numerous specific representations regarding the
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quality of its paint products, upon which John Tyczki reasonably relied and which
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induced JB Collision to enter into the JB Collision Agreement. As stated below, in
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response to John Tyczki’s specific questions, Sherwin-Williams stated to JB Collision,
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through John Tyczki, that its water-based automotive paint products were tested, proven,
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and perfected products that had been in use in other shops, and were free of certain
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specific defects. Specifically, Sherwin-Williams, specifically through Jose Garcia, and
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also Kurt Hammond, stated to John Tyczki that its water-based paint products provided a
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perfect color match and did not have any defects that would cause problematic physical
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characteristics such as “dye back” (also sometimes referred to as “loss of gloss”),
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“sanding scratches,” “color fading,” color match problems, “solvent popping,” paint
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“shrinkage,” and “orange peel.” Dye back is a defect in the paint in which the paint loses
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its shine and looks dull and flat; hence the term loss of gloss. Sanding scratches are a
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defect where the marks from the body work performed prior to the application of the
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1
paint are exposed through the paint; an observer can see the scratches from the sanding of
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the body work through the outer paint coat. Color fading, which is similar to dye back, is
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where the colors lose their brilliance, as if the color is being sucked out of the paint.
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Color match problems are where one batch, can, or mix of paint of a specific color, does
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not match others of the same color, or more specifically, upon repairing a vehicle, the
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fresh paint of the same type does not match the factory and/or existing paint on the
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vehicle. Solvent popping is where small, pinhole-like deformities appear on the outer
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layer (or clear coat) of the paint job. Shrinkage is where the primer sucks up the paint,
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causing a dry, matted finish, and also makes sanding scratches and other underlying
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impurities visible. Finally, orange peel is the development of a lumpy, yet still smooth,
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texture in the paint (rather than a flat surface) which causes the appearance of the paint to
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look like the outside of an orange peel.
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19.
Sherwin-Williams also stated to JB Collision that its new water-based
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automotive paint (as opposed to solvent-based paint), which was going to be legally
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required to be used in San Diego in the near future due to local environmental regulation,
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was of the same quality as the solvent-based paint. However, unlike the solvent-based
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paint, with which JB Collision never had any issues, Sherwin-Williams water-based paint
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had all of the defects stated above.
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20.
Specific representations and misrepresentations made by Sherwin-Williams
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to induce JB Collision to enter the JB Collision Agreement, and then subsequently to
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refrain from terminating the JB Collision Agreement, and for John Tyczki to enter into
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JJT Agreement on behalf of JJT, despite many instances of the above-mentioned
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problems, included, but are not limited to, the following interactions:
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a.
From August/September 2008 through 2012, Jose Garcia (Sherwin-
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Williams) made numerous and specific misrepresentations concerning the quality of
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Sherwin-Williams water-based products and service, first to induce JB Collision to enter
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into the JB Collision Agreement, and subsequently to avoid cancellation of the JB
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Collision Agreement, and then to induce John Tyczki to enter into the JJT Agreement.
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1
Throughout that timeframe, John Tyczki, on behalf of JB Collision, had at least twenty
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(20) telephone conversations from his office with Mr. Garcia, and met with Mr. Garcia in
3
a JB Collision shop on a number of other occasions. Specifically, in or about August
4
2008 through early September 2008, over the telephone and at JB Collision’s shops, in
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response to John Tyczki’s specific questions concerning color match, dye back, and
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shrinkage, Mr. Garcia expressly stated to JB Collision, to John Tyczki, that Sherwin-
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Williams water-based automotive paint was already tested, proven, and perfected, was as
8
good as Sherwin-Williams solvent-based paint products, and that that water-based
9
products did not have color match problems, color fading, shrinkage, sanding scratches,
10
solvent popping, and dye back. Mr. Garcia also stated that a vehicle could be painted
11
“prime to shine in 50 minutes” in response to John Tyczki’s specific questions regarding
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the use of the products and JB Collision’s volume of work; however, this was also not
13
true. Mr. Garcia made all of these specific misrepresentations to induce JB Collision to
14
enter into the JB Collision Agreement. Contrary to Mr. Garcia’s statements, Sherwin-
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Williams water-based paint was not perfected, and was poor quality paint, and it
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exhibited all of the defects stated above when purchased and used by Counter-Claimants,
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including dye back, color fading, shrinkage, sanding scratches, orange peel, and solvent
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popping. Further, JB Collision began using Spies Hecker/Dupont paint when it ceased its
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exclusive use of Sherwin-Williams paint in March 2013, and also during specific times
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when authorized by Sherwin-Williams to use Spies Hecker/Dupont paint to fix problems
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caused by Sherwin-Williams paint, and did not experience these problems. JB Collision
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is informed and believes Mr. Garcia knew about the problems with Sherwin-Williams’s
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paint products when he made the statements, and that he purposely misrepresented the
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quality of Sherwin-Williams paint in order to induce JB Collision into entering into the
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Agreement, because the color match problem occurred during the first week of the JB
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Collision Agreement in September 2008, and Mr. Garcia then admitted that these
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problems with the Sherwin-Williams paint products existed prior to JB Collisions’ use of
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the products during the first week of the Agreement.
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1
b.
Also during initial discussions with Mr. Garcia in or about August
2
2008, John Tyczki told Mr. Garcia that his intent was to comply with the imminent local
3
regulations requiring use of water-based paints. John Tyczki further told Mr. Garcia that
4
he wanted to use a perfected water-based paint system, and that he did not want JB
5
Collision’s shops to be an experimental or “guinea pig” shop for Sherwin-Williams to
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test new technology. Mr. Garcia stated John Tyczki that Sherwin-Williams’s water-based
7
paint had been perfected, and that JB Collision’s shops would not be test shops.
8
However, contrary to Mr. Garcia’s representations, use of Sherwin-Williams’s water-
9
based paint did result in the aforementioned problems, including color match problems,
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color fading, sanding scratches, solvent popping, shrinkage, and dye back, beginning with
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color match problems immediately after JB Collision began using the water-based paint
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products, and Mr. Garcia, and Mr. Hammond and later Derrick King, repeatedly
13
promised to fix these problems, but they were never fixed.
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c.
After approximately only one week of using Sherwin-Williams’s
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water-based paint products, John Tyczki complained to Mr. Garcia about the color match
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problems. John Tyczki told Mr. Garcia that he trusted Mr. Garcia and that he felt that Mr.
17
Garcia had lied to him, and that JB Collision would not have entered into the JB Collision
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Agreement if Mr. Garcia had not represented that Sherwin-Williams’s water-based paint
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system was tested, proven, and perfected. In response, Mr. Garcia admitted that Sherwin-
20
Williams’s water-based paint products did have problems, admitted that the problems
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were “company-wide” and not due to JB Collision’s workmanship, and that, contrary to
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Mr. Garcia’s prior representations that Sherwin-Williams’s water-based products had
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been perfected, the problems existed before JB Collision and Sherwin-Williams entered
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into the JB Collision Agreement. Mr. Garcia stated that, to induce John Tyczki not to
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cancel the JB Collision Agreement, JB Collision allow Sherwin-Williams time to fix the
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admitted problems given that the water-based paint requirement was not yet in effect,
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even though it was John Tyczki’s intention to enter into the JB Collision Agreement in
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order to preempt and “get ahead of the curve” of the imminent water-based paint
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1
requirement in San Diego and begin using water-based paint immediately, that Mr.
2
Garcia would, and did, provide JB Collision with solvent-based paint products in lieu of
3
the defective water-based paint products. Therefore, within one week of entering into the
4
JB Collision Agreement, Sherwin-Williams had JB Collision spraying its solvent-based
5
paint products instead of the water-based paint products, because the Sherwin-Williams
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water-based paint products were defective.
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d.
Shortly thereafter, also in September 2008, Kurt Hammond (Sherwin-
8
Williams), along with Jose Garcia, met with John Tyczki at the Brigantine Restaurant in
9
Poway, California, and initially repeated the same misrepresentations concerning color
10
match of the water-based products, but then, after being confronted by John Tyczki and
11
hearing Mr. Garcia’s admission concerning the color match problems, Mr. Hammond
12
admitted to the prior misrepresentations and promised that the problems with the
13
Sherwin-Williams water-based paint products would be corrected, in order to induce JB
14
Collision to agree to allow Sherwin-Williams time to correct the problems, but which
15
were never corrected, and to refrain from terminating the JB Collision Agreement. JB
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Collision believes both Mr. Hammond and Mr. Garcia knew these representations were
17
false at the time they made them, given the fact that Mr. Garcia had admitted that the
18
problems existed even while he was making representations to the contrary to induce
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John Tyczki to enter into the JB Collision Agreement, and Mr. Hammond admitted that
20
Sherwin-Williams needed time to fix the color match problem which existed before the
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parties entered into the JB Collision Agreement.
22
e.
After Mr. Garcia switched out the water-based paint products for the
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solvent-based paint products, JB Collision was forced to use the Sherwin-Williams
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solvent-based paint products for approximately six (6) months until Sherwin-Williams
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informed John Tyczki that the problems with the water-based paint products had been
26
solved. However, within a few months after resuming use of the water-based paint
27
products, JB Collision continued to have problems with the still-defective water-based
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paint products, which lasted until the Agreement terminated. The defective products
10
1
caused color fading, sanding scratches to show through the paint, solvent popping,
2
shrinkage, and dye back. No vehicle could or ever was painted “prime to shine in 50
3
minutes.” John Tyczki continued using Sherwin-Williams products under the JB
4
Collision Agreement (and later JJT Agreement) in order to complete the Term of the JB
5
Collision Agreement, in reliance upon Sherwin-Williams’s repeated but false
6
representations that it would resolve the admitted problems with the water-based paint
7
products.
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f.
Within the first week of the JB Collision Agreement in September
9
2008, Mr. Lowry (Sherwin-Williams) met with and admitted to John Tyczki that there
10
were serious and numerous problems concerning the poor quality of the Sherwin-
11
Williams water-based products, including dye back, color fading, shrinkage, and solvent
12
popping, and that these were misrepresentations made to John Tyczki to induce him to
13
enter into the JB Collision Agreement. Contrary to what John Tyczki had been told by all
14
Sherwin-Williams representatives, Sherwin-Williams water-based paint products had not
15
been adequately tested, proven, or perfected, and were not ready for use in high quality
16
shops like JB Collision. Mr. Lowry also admitted that those problems could not be
17
corrected because there were problems with the paint formula. Mr. Lowry further
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admitted to John Tyczki that he had informed Sherwin-Williams management, including
19
Jose Garcia and possibly Kurt Hammond, that Sherwin-Williams should not have
20
induced John Tyczki to enter into the JB Collision Agreement because Sherwin-
21
Williams’s water-based paint products were not ready, were not perfected, and were not
22
up to John Tyczki’s standards because JB Collision’s shops perform high quality
23
services, which were not compatible with the poor quality of the Sherwin-Williams
24
water-based paint products.
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g.
Subsequent to the re-installment and use of Sherwin-Williams water-
26
based paint products after the six (6) month period of using Sherwin-Williams solvent-
27
based products, John Tyczki continued to complain about dye back, loss of gloss,
28
shrinkage, sanding scratches, color fading, and solvent popping, to Sherwin-Williams
11
1
representatives at various times, including specifically Jose Garcia, Derrick King, and
2
Hilary Castro (all of Sherwin-Williams), who admitted there were problems with their
3
product and repeatedly made promises that Sherwin-Williams would correct the defects
4
with the water-based paint products. After San Diego enacted a water-based requirement
5
in approximately June, 2010, JB Collision could no longer use Sherwin-Williams
6
solvent-based products in lieu of the water-based products and could not use a
7
competitor’s water-based products or else be in breach of the JB Collision Agreement
8
with Sherwin-Williams, so JB Collision was forced to continue relying on Sherwin-
9
Williams’s representations that the problems with its water-based paint products were
10
corrected and/or being corrected, although JB Collision continued to experience the same
11
problems, including dye back, color fading, shrinkage, loss of gloss, sanding scratches,
12
and solvent popping. Mr. Garcia, throughout the course of the relationship, would
13
provide John Tyczki with “goodwill adjustments” which were paint products free-of-
14
charge for the re-painting of vehicles necessitated by the poor quality of and the said
15
problems caused by the Sherwin-Williams paint products, but John Tyczki had to absorb
16
the labor costs of repainting the vehicles.
17
h.
In or about March 2011 to May 2011, John Tyczki informed Jose
18
Garcia that he was forming JJT and opening the John’s Collision Center in Santee,
19
California. Mr. Garcia stated that Sherwin-Williams considered John’s Collision Center
20
to be included under the JB Collision Agreement so JJT was also required to exclusively
21
use Sherwin-Williams paint products. Mr. Garcia promised that Sherwin-Williams was
22
close to having the defects in their paint products resolved and thereby induced John
23
Tyczki to enter into the JJT Agreement. Mr. Garcia continued to promise John Tyczki
24
that Sherwin-Williams was working on a solution to fix the problems with its water-
25
based paint system. Counter-Claimants believe that Jose Garcia knew that Sherwin-
26
Williams was not putting forth the effort, or did not have the ability, to correct the
27
problems with Sherwin-Williams’s water-based products, and was merely making these
28
///
12
1
statements to induce Counter-Claimants to enter into the JJT Agreement and continue the
2
exclusive relationship with Sherwin-Williams.
3
i.
During 2012, David Sowell (Sherwin-Williams) and Jose Garcia met
4
with John Tyczki at his office at John’s Collision Center, and Mr. Sowell made additional
5
misrepresentations that Sherwin-Williams was fixing the poor quality of the Sherwin-
6
Williams products, including the dye back, color fading, shrinkage, and solvent popping
7
problems. Mr. Sowell stated that “I will take care of all of these issues” and that Sherwin-
8
Williams would specifically correct the defects in reference to the problems with dye
9
back, loss of gloss, color fading, the appearance of sanding scratches, shrinkage, and
10
solvent popping. However, John Tyczki never heard from Mr. Sowell again. Contrary to
11
Mr. Sowell’s and Mr. Garcia’s representations, the defects in Sherwin-Williams paint
12
products were not corrected.
13
j.
In or about October 2012, Derrick King (Sherwin-Williams) told John
14
Tyczki that “I am going to fix your problems,” that Sherwin-Williams would correct the
15
paint products defects, and admitted that there were and had been continuing defects in
16
the Sherwin-Williams products which was causing dye back, loss of gloss, color fading,
17
appearance of sanding scratches, solvent popping, and shrinkage. John Tyczki discussed
18
with Mr. King that the $1.3 million purchase number would be hit in about six months,
19
showed Mr. King the numbers, and Mr. King promised that these problems would be
20
fixed in those six months; however, they were not.
21
k.
As referenced above, from September 2008 through February 2013,
22
John Tyczki, on behalf of JB Collision and JJT, made numerous and repeated complaints
23
concerning all of the aforementioned problems to Jose Garcia, David Cardenas, Kurt
24
Hammond, Derrick King, Hilary Castro, Jack Lowry, and David Sowell (all Sherwin-
25
Williams), as well as currently unidentified Sherwin-Williams technicians, all of whom
26
responded with misrepresentations similar to those described above with the intent to
27
induce Counter-Claimants to enter into the JB Collision Agreement and JJT Agreement,
28
and/or to induce Counter-Claimants to refrain from terminating the Agreements. JB
13
1
Collision believes that each of these representations were made with concurrent
2
knowledge of their falsity, and with the intent to induce Counter-Claimants to refrain
3
from terminating the Agreements.
4
l.
On February 6, 2013, after continued and repeated complaints from
5
John Tyczki concerning these problems with the Sherwin-Williams products, specifically
6
dye back, loss of gloss, color fading, appearance of sanding scratches, solvent popping,
7
and shrinkage, Hilary Castro (Sherwin Williams) proposed a 30/60/90 day plan to
8
purportedly correct the repeated problems about which the prior misrepresentations
9
regarding the quality of Sherwin-Williams paint and corrections regarding the problems
10
were made, which plan, in and of itself, is an admission as to the existence of the
11
defective products. However, it appears that Ms. Castro did not implement the plan.
12
21.
On or about February 28, 2013, Sherwin-Williams sent JB Collision and JJT
13
letters (separately) stating that Sherwin-Williams was “informed and believed” that JB
14
Collision and JJT had discontinued exclusive use of Sherwin-Williams products.
15
However, JB Collision did not discontinue exclusive use of until March 2013, after JB
16
Collision was certain it had satisfied the $1.3 million purchase/sales requirement. Further,
17
JJT did not terminate the JJT Agreement until April 8, 2013, as John Tyczki sent
18
Sherwin-Williams a letter dated April 5, 2013 which enclosed a check for $40,000.00 to
19
refund the JJT Advance pursuant to the JJT Agreement, and stating that JJT was
20
terminating the JJT Agreement as of April 8, 2013. Counter-Claimants terminated the
21
Agreements as a result of the numerous customer complaints and necessary re-repairs and
22
re-paintings of customer vehicles due to the low quality of Sherwin-Williams’s products,
23
and failure of Sherwin-Williams to effectively correct the quality issues.
24
22.
Counter-Claimants believe that the time each of the above representations
25
were made, Sherwin-Williams’s intended to induce and, in fact, did induce Counter-
26
Claimants to enter into the Agreements and to not terminate the Agreements, Sherwin-
27
Williams knew that its representations were false, and Counter-Claimants detrimentally
28
relied upon those misrepresentations in conducting themselves in entering into and
14
1
performing under the Agreements. In truth, the quality of the Sherwin-Williams products
2
was substandard, and continued to be substandard and generally poor, which resulted in
3
defects in paint jobs including dye back, sanding scratches, color fading, color match
4
problems, solvent popping, paint shrinkage, and orange peel, which has resulted and
5
continues to result in customers returning vehicles to correct the paint defects.
6
23.
Also throughout the Terms of the Agreements, John Tyczki, on behalf of
7
both JB Collision and JJT, made numerous complaints to Sherwin-Williams regarding the
8
quality of Sherwin-Williams’s products, and the difficulty JB Collision and JJT were
9
having due to the complications caused by Sherwin-Williams’s products’ poor quality.
10
Sherwin-Williams failed to cure the defects in product quality. Significantly, since the
11
termination of the Agreements, Sherwin-Williams has authorized John Tyczki to re-
12
repair customer vehicles using a competitor’s products.
13
24.
On information and belief, through interactions with various other local
14
members of the automotive repair and painting industry, Counter-Claimants understand
15
that Sherwin-Williams has received numerous similar complaints regarding the quality of
16
its paint and related products from other local members of the automotive repair and
17
painting industry, and therefore had further knowledge of the defects in its automotive
18
paint and related products, as alleged herein, even as they were making
19
misrepresentations to John Tyczki.
20
25.
As a result of the poor quality and defects of Sherwin-Williams paint and
21
related products, throughout the Terms of the JB Collision and JJT Agreements and
22
continuing through the present, JB Collision and JJT have received, and continue to
23
receive, numerous customer complaints and have had to, and continue to have to, re-paint
24
and/or re-repair many customer vehicles to honor the lifetime guarantee warranty of their
25
work. The poor quality of Sherwin-Williams automotive and related products was not
26
corrected and the continued use of these products resulted in customer complaints,
27
customer returns, the need for “re-do’s,” the performance of warranty work, and
28
additional damage to Counter-Claimants’ goodwill.
15
1
26.
Despite the fact that JB Collision satisfied the purchase/sales obligation and
2
JJT refunded the full JJT Advance amount pursuant to the JJT Agreement, and Counter-
3
Claimants made repeated complaints concerning the poor quality of the Sherwin-
4
Williams products, and that Sherwin-Williams made repeated misrepresentations
5
regarding the quality of its products and corrective measures, Sherwin-Williams has filed
6
a suit seeking monies ignoring Counter-Claimants’ substantial performance and
7
satisfaction of the terms of the JB Collision Agreement and JJT Agreement.
8
27.
As a result of Sherwin-Williams’s material breach of the JB Collision and
9
JJT Agreements due to the provision of poor quality products, Counter-Claimants have
10
suffered significant injury. Counter-Claimants have spent, and will continue to spend,
11
numerous labor hours and supplies correcting defects caused by Sherwin-Williams
12
products. Over the course of the last five (5) years, Counter-Claimants combined have
13
painted and/or repaired approximately two-hundred (200) vehicles per month using
14
Sherwin-Williams paint and related products. Due to Sherwin-Williams’s poor quality
15
and defective products, Counter-Claimants have incurred and will incur labor and
16
expenses for re-painting and/or re-repairing customer vehicles including, but not limited
17
to, the cost of customers’ car rental, and such tasks as de-trimming, stripping, primer, re-
18
painting, correcting damage to existing body work, and detailing the customer vehicles
19
previously repaired or painted with Sherwin-Williams paint and related products. The
20
average cost to re-paint and/or re-repair each vehicle painted and/or repaired with
21
Sherwin-Williams products costs approximately $2,000.00. Therefore, Counter-
22
Claimants estimate that the combined total amount of their potential costs that will be
23
incurred from re-painting and/or re-repairing customer vehicles that were serviced using
24
Sherwin-Williams paint and related products is approximately $20,000,000.00, without
25
consideration for the value of lost goodwill and reputation. To date, Counter-Claimants
26
have informed Sherwin-Williams of approximately $50,000.00 of repair work performed
27
on seventeen (17) vehicles in order to correct defects caused by Sherwin-Williams’s paint
28
products. Sherwin-Williams has refused to reimburse these costs based upon its failure to
16
1
respond. Counter-Claimants anticipate incurring substantial additional future costs for
2
correcting paint jobs on more vehicles in the future.
3
28.
Counter-Claimants also lost business and/or good will due to customers
4
becoming dissatisfied with their work due to defects caused by Sherwin-Williams
5
products. These economic damages are in an amount to be proven at trial.
6
29.
Additionally, Counter-Claimants have suffered harm to their reputation
7
amongst its customer base and within the local automotive painting and repair industry,
8
which has led and will continue to lead to a further loss of business and good will, due to
9
defects caused by Sherwin-Williams products.
10
FIRST CAUSE OF ACTION
11
(Breach of Contract--JB Collision Agreement)
12
30.
Counter-Claimants incorporate by reference all allegations in Paragraphs 1
13
through 29 of the Consolidated Second Amended Counterclaim as if fully set forth
14
herein.
15
16
17
31.
As set forth above, Sherwin-Williams owed contractual obligations to JB
Collision pursuant to the JB Collision Agreement.
32.
Sherwin-Williams materially breached the JB Collision Agreement by
18
supplying JB Collision with substandard paint products, which caused defects in JB
19
Collision’s repairs and paintings of its customers’ vehicles.
20
33.
JB Collision informed Sherwin-Williams of the defects of Sherwin-
21
Williams’s paint products to give Sherwin-Williams an opportunity to cure said defects.
22
Despite repeated notice, Sherwin-Williams continuously failed to adequately perform
23
under the JB Collision Agreement by failing to correct the defects and continuing to
24
provide JB Collision with poor quality products and services.
25
34.
As a direct and proximate result of Sherwin-Williams’s breach of the JB
26
Collision Agreement, JB Collision has suffered actual and consequential damages
27
including, without limitation, the costs of repeat repairs or paint jobs on JB Collision
28
customer vehicles made necessary by the defective Sherwin-Williams products, the lost
17
1
profits caused by lost business due to loss of customers caused by Sherwin-Williams’s
2
defective products, the value of the damage to JB Collision’s professional reputation in
3
the community and amongst its customers, and the amount of attorneys’ fees and costs
4
incurred in defending against Sherwin-Williams’s meritless claims against JB Collision,
5
all in amounts to be proven at trial.
6
SECOND CAUSE OF ACTION
7
(Breach of Contract--JJT Agreement)
8
9
10
11
12
13
35.
herein.
36.
As set forth above, Sherwin-Williams owed contractual obligations to JJT
pursuant to the JJT Agreement.
37.
Sherwin-Williams materially breached the JJT Agreement by supplying JJT
14
with substandard paint products, which caused defects in JJT’s repairs and paintings of its
15
customers’ vehicles.
16
38.
JJT informed Sherwin-Williams of the defects of Sherwin-Williams’s paint
17
products to give Sherwin-Williams an opportunity to cure said defects. Despite repeated
18
notice, Sherwin-Williams continuously failed to adequately perform under the JJT
19
Agreement by failing to correct the defects and continuing to provide JJT with poor
20
quality products and services.
21
39.
As a direct and proximate result of Sherwin-Williams’s breach of the JJT,
22
JJT has suffered actual and consequential damages including, without limitation, the
23
costs of repeat repairs or paint jobs on JJT customer vehicles made necessary by the
24
defective Sherwin-Williams products, the lost profits caused by lost business due to loss
25
of customers caused by Sherwin-Williams’s defective products, the value of the damage
26
to JJT’s professional reputation in the community and amongst its customers, and the
27
amount of attorneys’ fees and costs incurred in defending against Sherwin-Williams’s
28
meritless claims against JJT, all in amounts to be proven at trial.
18
1
THIRD CAUSE OF ACTION
2
(Concealment/Fraud)
3
4
5
40.
through 39 of the Counterclaim as if fully set forth herein.
41.
Sherwin-Williams contracted to sell JB Collision automotive paint and
6
related products for use in JB Collision’s paint and repair of automobiles pursuant to the
7
JB Collision Agreement entered into on September 10, 2008. Similarly, Sherwin-
8
Williams subsequently contracted Sherwin-Williams contracted to sell JJT automotive
9
paint and related products for use in JJT’s paint and repair of automobiles pursuant to the
10
11
JJT Agreement entered into on May 24, 2011.
42.
Sherwin-Williams knowingly and intentionally concealed information
12
regarding the quality of its paint and related products during the negotiation and
13
formation of the JB Collision Agreement, which induced JB Collision to enter into the JB
14
Collision Agreement. Sherwin-Williams expressly told John Tyczki that its water-based
15
automotive paint products were tested, proven, and perfected prior to the formation of the
16
JB Collision Agreement; however, this was untrue, as admitted by Jose Garcia and Jack
17
Lowry.
18
43.
Subsequent to the formation of the JB Collision Agreement, Sherwin-
19
Williams continuously, knowingly, and intentionally misled all Counter-Claimants about
20
Sherwin-Williams’s efforts to cure the admitted defects in its water-based automotive
21
products in order to induce JB Collision to refrain from terminating the JB Collision
22
Agreement.
23
44.
Further, because John Tyczki was engaged in all interactions with Sherwin-
24
Williams on behalf of both JB Collision and JJT, the continued representations by
25
Sherwin-Williams regarding its efforts to correct the defects with its water-based paint
26
products (in conjunction with Sherwin-Williams’s threats to initiate a breach of contract
27
action under the JB Collision Agreement) induced JJT, through John Tyczki, to enter
28
into, and subsequently refrain from terminating, the JJT Agreement.
19
1
45.
Sherwin-Williams intentionally failed to disclose the poor quality and
2
defects of Sherwin-Williams’s paint and related products to JB Collision, including
3
defects in Sherwin-Williams paint products that cause dye back, sanding scratches, color
4
fading, color match problems, solvent popping, paint shrinkage, and orange peel. JB
5
Collision did not know of the low quality and defects in Sherwin-Williams’s paint and
6
related products at the time of formation of the JB Collision Agreement. Oppositely,
7
Sherwin-Williams knew about the defects with its automotive paint and related products,
8
and acted with intent to deceive JB Collision in order to induce JB Collision to enter into
9
the Agreement, and subsequently refrain from terminating the Agreement. Sherwin-
10
Williams also knowingly, intentionally, and falsely represented to JB Collision that its
11
water-based automotive paint and related products were tested, proven and protected in
12
order to induce JB Collision to enter into the JB Collision agreement, and later
13
knowingly, intentionally and falsely represented that it could and would correct the
14
problems with its automotive paint and related products, while knowing that such
15
problems could not be corrected, in order to induce JB Collision to refrain from
16
terminating the Agreement, and to induce JJT to enter into the JJT Agreement, and
17
subsequently refrain from terminating the JJT Agreement.
18
46.
As a result of Sherwin-Williams’s representations throughout the formation
19
of the JB Collision, through the formation of the JJT Agreement, and during the entire
20
performance of the JB Collision Agreement and JJT Agreement, Counter-Claimants were
21
induced to, and reasonably did, rely on Sherwin-Williams’s deceptive representations
22
regarding the quality of Sherwin-Williams’s automotive paint and related products, and
23
its efforts to correct the defects therewith, in entering into the JB Collision Agreement
24
and JJT Agreement, and to continue refraining from terminating either the JB Collision
25
Agreement or JJT Agreement.
26
47.
As a direct and proximate result of Sherwin-Williams’s deceit and
27
concealment, Counter-Claimants were induced to purchase, and continue purchasing,
28
Sherwin-Williams’s defective paint and related products in an amount exceeding $1.3
20
1
million, and have suffered injury outside that envisioned by either the JB Collision
2
Agreement or the JJT Agreement. In purchasing and using Sherwin-Williams’s defective
3
paint and related products, Counter-Claimants have suffered damages including, without
4
limitation, the costs of repeat repairs or paint jobs on Counter-Claimants’ customer
5
vehicles made necessary by the defective Sherwin-Williams products, the lost profits
6
caused by lost business due to loss of customers caused by Sherwin-Williams’s defective
7
products, the value of the damage to Counter-Claimants’ professional community and
8
amongst its customers, and the amount of attorneys’ fees and costs incurred in defending
9
against Sherwin-Williams’s meritless claims against Counter-Claimants, all in amounts to
10
11
be proven at trial.
48.
Counter-Claimants are informed and believe and thereon allege that this
12
conduct was caused and committed by Counter-Defendant with the intent to cause harm
13
to Counter-Claimants, and/or to intentionally deceive and commit fraud upon Counter-
14
Claimants, and/or with oppression and in reckless disregard of the rights of Counter-
15
Claimants.
16
FOURTH CAUSE OF ACTION
17
(Intentional Misrepresentation)
18
49.
19
20
herein.
21
50.
Sherwin-Williams intentionally and falsely represented the quality of its
22
paint and related products, and subsequently its efforts and/or ability to cure defects
23
therewith, which harmed Counter-Claimants financially and with regard to Counter-
24
Claimants’ reputation.
25
51.
26
27
28
21
1
2
3
52.
Sherwin-Williams made representations regarding the quality of Sherwin-
4
Williams’s automotive paint and related products to Counter-Claimants, including that its
5
water-based automotive paint and related products were tested, proven, and perfected at
6
the time of the formation of the JB Collision Agreement in September 2008 and that it
7
would not cause dye back, sanding scratches, color fading, color match problems, solvent
8
popping, paint shrinkage, and orange peel, and subsequently regarding Sherwin-
9
Williams’s efforts and/or ability to cure the aforementioned defects with said products.
10
Sherwin-Williams knew its representations regarding the quality of its automotive paint
11
and related products, and its efforts and/or ability to cure the aforementioned defects with
12
said products, were false at the time it made the representations, and/or Sherwin-Williams
13
made the representations with a reckless regard for their truth.
14
15
16
53.
At all times, Sherwin-Williams intended that Counter-Claimants rely on its
misrepresentations.
54.
Counter-Claimants were induced to, and reasonably did, rely on Sherwin-
17
Williams’s false representations regarding the quality of Sherwin-Williams’s automotive
18
paint and related products, and subsequently Sherwin-Williams’s efforts and/or ability to
19
cure defects in said products, to enter into the JB Collision Agreement and JJT
20
Agreement, and subsequently to not terminate those Agreements.
21
55.
As
a
direct
and
proximate
result
of
Sherwin-Williams’s
false
22
representations, Counter-Claimants were induced to purchase, and continue purchasing,
23
Sherwin-Williams’s defective automotive paint and related products in an amount in
24
excess of $1.3 million, and have suffered injury outside that envisioned by either the JB
25
Collision Agreement or the JJT Agreement. In purchasing and using Sherwin-Williams’s
26
defective paint and related products, Counter-Claimants have suffered damages
27
including, without limitation, the costs of repeat repairs or paint jobs on Counter-
28
Claimants’ customer vehicles made necessary by the defective Sherwin-Williams
22
1
products, the lost profits caused by lost business due to loss of customers caused by
2
Sherwin-Williams’s defective products, the value of the damage to Counter-Claimants’
3
professional reputation in the community and amongst its customers, and the amount of
4
attorneys’ fees and costs incurred in defending against Sherwin-Williams’s meritless
5
claims against Counter-Claimants, all in amounts to be proven at trial.
6
56.
Counter-Claimants are informed and believe and thereon allege that this
7
conduct was caused and committed by Counter-Defendant with the intent to cause harm
8
to Counter-Claimants, and/or to intentionally deceive and commit fraud upon Counter-
9
Claimants, and/or with oppression and in reckless disregard of the rights of Counter-
10
Claimants.
11
FIFTH CAUSE OF ACTION
12
(Negligent Misrepresentation)
13
57.
14
15
herein.
16
58.
Sherwin-Williams negligently misrepresented the quality of its automotive
17
paint and related products, and subsequently its efforts and/or ability to cure defects
18
therewith, which harmed Counter-Claimants financially and with regard to Counter-
19
Claimants’ reputation.
20
59.
21
22
23
24
25
26
60.
Sherwin-Williams made representations regarding the quality of Sherwin-
27
Williams’s automotive paint and related products to Counter-Claimants, including that its
28
water-based automotive paint and related products were tested, proven, and perfected at
23
1
the time of the formation of the JB Collision Agreement in September 2008 and that it
2
would not cause dye back, sanding scratches, color fading, color match problems, solvent
3
popping, paint shrinkage, and orange peel, and subsequently regarding Sherwin-
4
Williams’s efforts and/or ability to cure the aforementioned defects with said products.
5
Sherwin-Williams had no reasonable basis for believing its representations regarding the
6
quality of its automotive paint and related products, and its efforts and/or ability to cure
7
said defects, were true at the time it made the representations.
8
9
61.
At all times, Sherwin-Williams intended that Counter-Claimants rely on its
misrepresentations.
10
62.
Counter-Claimants were induced to, and reasonably did, rely on Sherwin-
11
Williams’s false representations regarding the quality of Sherwin-Williams’s automotive
12
paint and related products, and Sherwin-Williams’s efforts and/or ability to correct
13
defects in said products, to enter into the JB Collision Agreement and JJT Agreement,
14
and subsequently to not terminate those Agreements.
15
63.
As
a
direct
and
proximate
result
of
Sherwin-Williams’s
false
16
representations, Counter-Claimants purchased, and continued to purchase, Sherwin-
17
Williams’s defective paint and related products in an amount in excess of $1.3 million,
18
and have suffered injury outside that envisioned by either the JB Collision Agreement or
19
the JJT Agreement. In purchasing and using Sherwin-Williams’s defective paint and
20
related products, Counter-Claimants have suffered damages, including, without
21
limitation, the costs of repeat repair or paint jobs on Counter-Claimants’ customer
22
vehicles made necessary by the defective Sherwin-Williams products, the lost profits
23
caused by lost business due to loss of customers caused by Sherwin-Williams’s defective
24
products, the value of the damage to Counter-Claimants’ professional reputation in the
25
community and amongst its customers, and the amount of attorneys’ fees and costs
26
incurred in defending against Sherwin-Williams’s meritless claims against Counter-
27
Claimants, all in amounts to be proven at trial.
28
///
24
1
SIXTH CAUSE OF ACTION
2
(Unjust Enrichment)
3
64.
4
5
herein.
6
65.
As part of the JB Collision Agreement and JJT Agreement, Counter-
7
Claimants agreed to exclusively purchase, and paid for, Sherwin-Williams paint and
8
related products. Counter-Claimants reasonably expected quality paint and related
9
products, and the adequate and timely curing of defects therewith, in consideration for the
10
terms of the Agreements.
11
66.
Sherwin-Williams acknowledged, accepted, and derived benefits from the
12
JB Collision Agreement and JJT Agreement and Counter-Claimants’ performance under
13
the Agreements.
14
67.
Counter-Claimants did indeed purchase and use Sherwin-Williams
15
automotive paint and related products, which were poor quality and defective in that they
16
caused dye back, sanding scratches, color fading, color match problems, solvent popping,
17
and paint shrinkage on customer vehicles. As a result, Counter-Claimants were harmed
18
by Sherwin-Williams financially, professionally, and in their reputation, in an exact
19
amount not yet known, received payments in excess of $1.3 million from Counter-
20
Claimants for products which were worth considerably less, and did not incur the labor
21
costs for the repainting of vehicles which were damaged by the use of the Sherwin-
22
Williams products because Sherwin-Williams would only provide a goodwill adjustment
23
in the form of paint products.
24
68.
It is inequitable for Sherwin-Williams to enjoy the benefit of the payments
25
pursuant to the JB Collision Agreement and JJT Agreement, while Counter-Claimants did
26
not derive the expected benefit, and have suffered, and will continue to suffer, actual
27
harm from the Sherwin-Williams automotive paint and defective products.
28
///
25
1
2
3
WHEREFORE, Counter-Claimants respectfully requests that the Court grant
judgment in their favor against Sherwin-Williams as follows:
1.
4
5
Actual and consequential damages for breach of contract, in an amount to be
proved at trial;
2.
Loss of business and/or good will and/or reputation with Counter-Claimants’
6
customers, as a result of Counter-Claimants use of Sherwin-Williams
7
products on customers’ vehicles, in an amount to be proved at trial;
8
3.
9
Actual costs of repairing customers’ vehicles as a result of the use of
Sherwin-Williams products on customers’ vehicles, including but not limited
10
to, honoring warranties on said vehicles, in an amount to be proved at trial;
11
4.
Punitive damages, in an amount to be proved at trial;
12
5.
Pre-judgment interest at the legal rate;
13
6.
Attorneys’ fees as may be applicable;
14
7.
Costs of suit; and,
15
8.
All other relief as the Court deems just and proper.
16
17
JURY DEMAND
Counter-Claimants demand trial by jury on all issues so triable.
18
19
DATED: June 24, 2014
JACKSON LEWIS P.C.
20
By:
21
22
23
24
25
26
4849-8526-3899, v. 2
/s/Paul F. Sorrentino
Paul F. Sorrentino, Esq.
SorrentinoP@jacksonlewis.com
John P. Nordlund, Esq.
John.Nordlund@jacksonlewis.com
Attorneys for COUNTER-CLAIMANT
JB COLLISION SERVICES, INC. dba
J&M AUTOBODY dba EL DORADO
COLLISION
27
28
26
EXHIBIT 1
Pages 27-29
(JB Collision Agreement)
TO
COUNTER-CLAIMANTS’ CONSOLIDATED
SECOND AMENDED COUNTERCLAIM FOR
USDC CASE NO.: 13-CV-1946 LAB (WVG)
EXHIBIT 1
PAGE 27
EXHIBIT 1
PAGE 28
EXHIBIT 1
PAGE 29
EXHIBIT 2
Pages 30-31
(JJT Agreement)
TO
SUPPLYAGREEMENT
The
dba
4440
w
illiams"'
Williams Company
n-Williams Automotive Finishes
ille CenterRoad
le Heights,Ohio 44128
Attn:
"Customer"
JJT Inc.
dba John's Collision Center
10806ProspectAvenue,Suite5
Santee,California 9207|
Atbr:
-i
pu1".. 5 RA
.zon
l.
TERM OF AGRFEMENT. The term of this Supply Agreement("Agreenent") shall commenceon the Effective Date
and
continueuntil the dateuponwhich Net Sales(ashereinafterdefined)is equalto Two HundredFiffy Thousandand00/100
Do,llars($250,000.00)(the "Term"). For the purposesof this Agreement,"Net Salos" shall meanthe grosssalesof SW P'aint
(ashereinafterdefined)by Sherwin-Williamsto Customerduringthe Term of this Agreement,minusall credits,discomts,
incentives,allowances,retums,freight, bad debt, salestaxesand/orsimilar taxes
SALE ()F PRqDUCTp.
(A)
the
During the Term, Customershall purchasefrom Sherwin-Williams all of Customer'srequirementsfor all
Products(ashereinafterdefined)usedby Customerat all automotivecollisionrepairandrefinishfacilitiesoraned
and/or operatedby Customer,noril or in the future, including, without limitation, the body shop located a1rthe
addressfor Customerset forth at the beginningof this Agreement(individually refened to hereinas a "Body
Shop" and collectivelyrefenedto hereinasthe "Body Shops"). The automotivepaintsandcoatingspwchiued
by Customershall be automotivepaintsand coatingsmanufacturedand sold by Sherwin-Williamsundet the
"sherwin-Williams"label("SW Paint Products").
"Products" shall meanall automotivepaints,coatingsand relatedproducts,including,without limitation,,the
following:
single component,h{o oomponent,
primers (including, without limitation, solvent-based,wrater-based,
(D
epory
and
surface
trealment);
urethane,
water-based,singlestage,basecoats,low VOC
(ii)
top coats(including,without limitation, solvent-based,
single stageand low VOC basecoats);
(iiD
hardeners;
and retarders);
(iv)
solvents(including,without limitation, reducers,accelqratclrs
and
(v)
tapes,
adhesives;
abrasives,
(vi)
all other associatedproducts.
PRICE FOR PRODUCTS. The price for the SW PaintProductspurchasedby Customershallbe the pricesspecifiedon
Sherwin-Williamsin effect at the time of purchase,lessfifteen percent(15%)' The price for all o'ther
irh"r Prir-, Lirt
"f
shallbe the pricesin effect at the time of purchase.Customershallbe responsiblefor the paymentof all applicablefederal,
localsales,useandsimilartaxes.
PAYIVIEN,T. The paymentterms for all Productspurchasedby Customerpursuantto this Agreementshall be fwenty-five
4.
(25)
no111
ttt" aut" of Sherwin-Willians' statement.Customershall remit all paymentsfor Productsin the form of cashor a
shallbe entitledto a two percent(2%) discounton all invoicesfor rwhichpaymentin full is receivedby Shenwinchecli.
within fifteen (15) daysfollowing the dateof the stalementupon which s$chinvoicesfust appear'
will
ADVANCE.
Witttin thirty (30) daysafter the Sherwin-Williams' SigningDatE(as hereinafterset forth), Sherwin-Williiams
1n;
shall provide an advanceto Customer in the amount of Forty Thousandand 00/100 Dollars ($40'000t'00)
('oAdvance").
(B)
Upon the occlursnceof any of the following events("Acceleration Event(s)"), Customershall pay the erntire
amountof the Advanceto Sherwin-Williams,without notice or demand;
anyothercovonantor
(i)
if Customerfails to pay any amountowed pursuantto thdsAgreementor breaches
obligation undertlis Agreement;
(ii)
if Customerterminatesthis Agreement for any reasonprior to the expiration of the Term (provided,
however,that nothing in this Agreementshall be consfued as giving Customerthe right to terminate
this Agreementprior to the expirationofthe Term);
(iii)
if ther; is any affirmative act of insolvency by Customer,or any filing by or againstCustomerunder
any bankruptcy or insolvenry law or statute or any law forthe reliefof, or relating to, debtors;
(iv)
ifany Body Shop ceasesor substantiallycurtailsoperations;
or
portion of any Body Shop'sbusinerss
(v)
if Customersellsor otherwisedisposesof all or a substrantial
(vi)
assets;
ifthere occursa changein the ownershipor control of{nore thanten percent(10%) ofthe businessor
assets of or ownership intsrests in Customer (whettrrerin a single transaction or in a series of
transactions);or
EXHIBIT 2
PAGE 30
(vii)
if Customerfor any reasonceasespurchasing(or purchasingi1srequirementsfor) ProductsIiom
Sherwin-Williams,or is purchasingmerelya de minimisamountof Productsfor theprimarypurposeof
avoiding operationof this provision.
COMPETITIVE PRICINGT NO CONFLICT: CON!'IDENTIALITY. Customer:(A) representsand waffan1;sto
6.
Shenvi Williams that the executionandperformanceof this Agreementby Customerdoesnot andwill not constitutea breac;hof
contract to whioh Customer is a party; (B) covenantsthat Customer shall maintain all information relating to this
any exi
Asreen
in strict confidenceand shall not disclosethe information containedin this Agreementtoanyperson,coryoration,firm or
entity
as required by law or by generallyacceptedaccountingprinciples; (C) tepresentsandwarrantsto Sherwin-Williamsthat
it has
an offer to purchaseproductsof like gradoandqualityto theProduclsftom anothersupplieruponthetermsand
conditi
setforth in this Agreement;and {D) acknowledgesand agreesthat Sherwin-Williarnshasofferedthetermsand condit.ions
in this Agreementin orderto meetsuchcompetitiveoffer.
set
WARRANTIES.
for
PRf,C
WA
THE I
PAKT
INCI
Customerwill be entitled to participate in any product wananty program offered by Sherwin-Williams
Customerqualifies. EXCEPT AS PROVIDED IN A WARRANTY PROGRAM REFERREDTO IN THE
G SENTENCE IN WIIICH CUSTOMER IS P.{RTICIPATING, SHf,RWIN.WILLIAMS DISCLAIMS I\LL
ES OF AI''IY KIND. EXPRESS OR IMPLIED. ORAL OR WRITTEN, INCLUDING BUT NOT LIMITED TO
WARRANTY OF MERCHANTA,BILITY AND THE IMPLIED WARRANTY OF FITNESS FOIR A
R PURPOSE. IN NO EVENT SHALL SHERWIN-WILLIAMS BN LI.A,BLE FOR SPECIAL,INDIRECT,
^ALOR CONSf,QUENTIAL DAMAGES.
L
NOTICES. Any communicationbetweenSherwin-WilliamsandCustomorregardingthetermsofthis Agreementshallbe
to theappropriateparfyaf the
in wriiti g andshallbe sentby reputableovernightcourieror by aedifiedmail, returnreceiptrequested,
set forth at the beginning of this Agreement. Either parlrymay changethe addressfor notice by sending a notice in, the
providedherein
MISCELI,ANPOUS. The only mannerin which this Agreementmay be amendedor modified is by a written document,
9.
signed an authorizedofficer of Sherwin-Williamsandsignedon behalfof Customerthat specificallystatesit is an ameudmentor'
ion of this Agreement.No waiver of eitherparty'srightsunderthis Agreementshallbe effectiveunlessmadein a writing
signed an authorizedofficer of Sherwin-Witliamsandsignedon behalfof Customer"Thewaiver of a breachof anyprovisio'nof
this ltr
shall not constitutea waiver ofa prior, concurrentor subsequentbreachofthe sameprovision or ofany other
provisi . This Agreementshallbe govemedby the internallawsofthe Stateof Ohio. In the eventanyprovisionofthis Agreernent
is held be illegal or otherwiseunenforceablefor any reason,suchprovisionshall be severedfrom this Agreement,but the entire
shall not fail on accountthereof, andthe balanceofthe Agreementshall rpmain in full force and effect. In no eventshall
A
ionsin this Agreementrelatingto the repaymentof the Advancebe construedas liquidateddamagesor as an electionor
the
befweenthepartiesheretowifh refer,"-ncp
lim
of remedies.This Agreementconstitutesthe entireunderstandingand agreeme,nt
shallvary or modify thewrittentorms
ject
prior
to
this
Agreement
to its
matter. No statementor agreement,oral or written, made
submittedby Customerto Sherwinor
other
document
purchase
preprinted
contained
order
and
conditions
on
auy
terms
hereof.The
wi
shall not apply to any purchaseof Products.
MENT WILL NOT BE BINDING UPON SHERWIN.WILLIAMS UNTIL SIGNED BY THE PRESIDI'NT
THISi
OIl.1t ICE PRESIDENTOF THE AUTOMOTIVODIVISION OF SHERWItr'{.WILLIAMSAND BY CUSTOMER.
THE
dba
WILLIA,MS COMPANY
Williams Automotive Finishes
JJT INC.
By'
Name:
Title:
EXHIBIT 2
PAGE 31
EXHIBIT 3
Page 32
(Guaranty)
TO
Guaranty
Finishes
("Gua
Forand in considerationofthe agreementof The Sherwin-WilliamsCompany,dba Sherwin-WilliamsAutomotive
JohnTlczki
rwin-Williams") to extendcreditto JJTInc., dbaJohn'sCollision Center("Customer'), theundersigned,
payment
performance
prompt
by
guarantecs
and
and
complete
irevocably
and
the
unconditionally
"), herebyabsolutely,
andShonwinby andbetween
Customer
to Sherwin-Williams
undertheSupplyAgreement
obligations
Custonr of all of Customer's
Williams and/orunder any other ag{eementor affangement,now or hereafterowing (collectivelyreferredto herein as the
"). Upon the failure by Customerto pay to Sherwin-Williamsthe full arnountthat is due and payableunderany olithe
"0bligra
Oblieali , Guarantorshall pay to Sherwin-Williams upon demandthe full amorrrntthat is due and payableunder all of'the
This guarantyis a primary, absolute,irrevocableand unconditionalobligation of Guarantorand is enforceabl: by
obr
and assigns,beforeor afterproceedingagainstCustomer,any otherguarantorand/orany collal;eral
Sherwirn- illiams, its successors
Obligations,and regardlessof any insolvency,receivershipor bankruptryof Customeror any other guarantor,or any
secufing
and/orthe Obligations.
reduction,extensionor othermodification of Customer'sindebtedness
The obligationsofGuarantorunderthis Guaranfyarein additionto andshallnot prejudiceor be prejudicedby any
t, instrument,suretyor guaranty(including any otheragreement,instrument,suretyor guarantysignedby Guarantor)
other
WithoutnoticetoGuarantor,Sherwin-Williams
which
WilliamsmaynoworhereafterholdrelativetoanyoftheObligations.
may: (i,t
n personalcredithistory andcurrentdebtinformationof Guarantorasrequired;(ii) release,comptomise,or agreenot to
or in part,Customeror any otherobligor,guarantor,endorseror surefyuponany of the Obligations;(iii) waive, rescind,
sue,m
with its terms,eitherin whole or in
renew,
modifr, increase,decrease,delete,terminate,amend,or acceleratein apcordance
covenant,condition,or obligationof or with Customeror any
part, any the Obligations,any of thetermsthereof,or anyagreemento
gor,guarantor,endorseror suretyupon anyofthe Obligations;(iv) applyanypaymentreceivedfrom Customer,Guarantoror
other
any
obligor, guarantor,endorseror suretyupon anyof the Obligationsto any of the Obligationswhich Sherwin-Williamsmay
choose;( ) enterinto any accordmd satisfactionagreementasdeemedadvisableby Sherwin-Williams;and (vi) sunender,releat;eor
recerye propertyor othersecurityofany kind or naturewhatsoeverheld by it or anypersonor entity on its behalfor for its accrount
of Customeror any Obligation,or substituteany collateralso held by Sherwin-Williamsfor othercollateral
securing indebtedness
of like lk , or of any kind, or adjust,compromiseandreceivelessthanthe amountdueuponany suchcollateral.Sherwin-Williams
no duty to undertaketo collect upon any collateralor any part thereof,and shall not be liable for any negligenc;eor
shall bt:
mistakei judgment in handling,disposingof, obtaining,or failing to collectupon,or perfectingor maintaininga securityinterestin,
ateral.None of the actionsdescribedin this paragfaphshallreleaseGuarantorfrom anyobligationor otherwiseaffectthe
anysuch
oblisatii of Guarantorunderthis GuaranW.
Guarantorinevocablywaivesandreleasesanyclaimor defenseto this Guaranfybaseduponlackofconsiderationor
of
providedby law, including,without limitation, defensesbaseduponanyofthe following: (i) noticeofacoeptanr:e
any
default
by
relates
of
any
it
and
to
which
any
Obligation
renewal
of
by Sherwin-Williamsandof the creation,extensionor
thisG
; (ii) notice of presentment,demanclfor payment,notice of dishonor or protestof any of Customer'sobligationsor the
r of any personor entity held by Sherwin-Williamsas collateralsecurityfor any Obligation;(iii) noticeofthe failure oI'atry
person entity to pay to Sherwin-Williamsany indebtednessheld by Sherwin-Williamsas collateralsecurifyfor any Obligal;ion;
(iv) fai
of Sherwin-Williamsto obtainandperfector maintainthe perfectionor priority of any securityinterestor lien on proF)erty
to secuife Obligation;(v) the failure of Sherwin-Williamsto haveany otherpersonor entity executeany guarantyrelatingto the
of credit to Customer;(vi) any failure promptly to commencesuit against4ny party or to give any noticeto or make any
emand
upon Guarantoror Customer;(vii) offsets and counterclaimswhich Guarantormay at any time haveto any clailn of
or
claim
by
Sherwin-WilliamsagainstCustomer;and(viii) anydefenseto anyofthe Obligationswhich maybe availableto or couldbeasserted
or
Sherwin-Willianns
panofGuarantor,
Customer,
, exceptfor payment.No act,failure to act,or omissionof anykind onthe
in
writing
by
to
hereafter
unless
agreed
hereunder
release
ofGuarantor
or entity shall be a legal or equitabledischargeor
any
Sherwi
D.
Guarantor'sexecutionof this Guarantywas not basedupon any factsor materialsprovidedon behalfof Sherwinstatementor analysismadeon behalf of
wil
and Guarantorwas not inducedto executethis Guarantyby any representation,
or reportsdeemedadvisableby
information
obtaining
any
independently
responsibility
for
illiams. Guarantorassumessole
Sherwi
with regardto Customer,and Guarantoragreesto rely solely on the information or reportsso obtainedin reachingany
decision
executethis Guaranty.
TYCZK.
3^to -rt
EXHIBIT 3
PAGE 32

JB Collision et al v. Sherwin-Williams

Transcription

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